CHRIS MATTHEWS, MSNBC HOST: Watching history, standing in the frigid cold of southern Illinois in Lincoln country, I saw Barack Obama declare for president. It was a day that Honest Abe himself would have loved, a day that gave evidence that the San Andreas fault of American life, the racial divide may truly be narrowing.

Let‘s play hardball.

Good evening. I‘m Chris Matthews. Welcome to HARDBALL.

The Super Bowl is history now, but the real battle begins, the deep-in-the-bones conflict over this war. Barack Obama says it was ill-conceived from the beginning, a bad idea, the very notion of attacking, invading and occupying a Muslim country in the middle of Arabia.

Hillary Clinton still won‘t go that far. She says she voted to give President Bush the authority to attack, invade and occupy Iraq but didn‘t think he would use it.

Today on Lincoln‘s birthday we have to wonder if the same forces—ideological zealotry and political nervousness that took us into Iraq will take us to war with Iran.

Plus, defense attorneys for Scooter Libby called reporters Bob Woodward, Walter Pincus and Bob Novak to the stand today. HARDBALL‘s David Shuster will have the full report on that.

But first, this weekend Senator Barack Obama announced his candidacy for president. I was out there, and here‘s my report on the weekend in presidential politics.

MATTHEWS (voice-over): It was a big weekend for two of the top Democrats running for president, Senators Hillary Clinton and Barack Obama.

I traveled to Springfield, Illinois, home of Abraham Lincoln, to cover Obama‘s campaign announcement in the frigid, sub-freezing temperature.

UNIDENTIFIED FEMALE: I know it‘s freezing, so thanks for getting up and being with us this morning.

MATTHEWS (on camera): Yes. I he guess the Arctic Circle wasn‘t available this morning.

(voice-over): Obama spoke on Saturday before a fired-up crowd half the size of a football stadium.

SEN. BARACK OBAMA, (D-IL) PRESIDENTIAL CANDIDATE: In the shadow of the old state capital where Lincoln once called on a house divided to stand together, where common hopes and common dreams still live, I stand before you today to announce my candidacy for president of the United States of America!

MATTHEWS: Obama offered himself as a fresh face, powerfully suggesting it is just what the country needs.

OBAMA: I know that I haven‘t spent a lot of time learning the ways of Washington. But I‘ve been there long enough to know that the ways of Washington must change.

MATTHEWS: On the on the war in Iraq, Obama criticized not only the handling of the Iraq war, but the very decision to go in the first place, blasting the idea that...

OBAMA: We‘ve been told that tough talk and ill-conceived war can replace diplomacy and strategy and foresight.

MATTHEWS: In an interview aired Sunday night on “60 Minutes”, Obama and his wife Michelle were asked about his safety on the campaign trail.

STEVE KROFT, CBS CORRESPONDENT: This is a tough question to ask. But a number of years ago, Colin Powell was thinking about running for president and his wife Alma really did not want him to run. She was worried about some crazy person with a gun. Is that something that you think about?

MICHELLE OBAMA, WIFE OF BARACK OBAMA: I don‘t lose sleep over it

because the realities are that, you know, as a black man, you know, Barack

can get shot going to the gas station. You know, so, you know, you can‘t -

you can‘t make decisions based on fear and the possibility of what might happen. We just weren‘t raised that way.

MATTHEWS: But it wasn‘t all smooth sailing for Barack Obama this weekend. He found himself trying to clean up a word he used to describe the deaths of U.S. soldiers in Iraq.

OBAMA: We ended up launching a war that should have never been authorized and should have never been waged and to which we now have spent $400 billion and have seen over 3,000 lives of the bravest young Americans wasted.

MATTHEWS: Obama later told a reporter he was upset with himself for saying those lives had been wasted. What he was arguing, however, is just what most Democrats believe: that the war was a mistake.

UNIDENTIFIED FEMALE: Thank you, thank you, thank you.

MATTHEWS: In New Hampshire, the leading Democratic candidate, Hillary Clinton, was pressed hard on her Iraq position, which is not in step with the majority of Democrats.

UNIDENTIFIED MALE: And I want to know if right here, right now, once and for all, without nuance, you can say that that war authorization vote was a mistake? I and I think a lot of other Democratic primary voters, until we hear you say that, we‘re not going to hear all these other great things you‘re saying.

SEN. HILLARY RODHAM CLINTON, (D-NY) PRESIDENTIAL CANDIDATE: Knowing what I know now, I would never have voted for it. But I also...

(APPLAUSE)

CLINTON: ... I mean, obviously you have to weigh everything as you make your decision. I have taken responsibility for my vote. The mistakes were made by this president, who misled this country and this Congress into a war that should not have been waged.

(APPLAUSE)

(END VIDEOTAPE)

MATTHEWS: So to talk about Hillary and Obama and all the things 2008, we‘re joined by the Hardballers, “Newsweek‘s” Howard Fineman and “The Hotline‘s” Chuck Todd.

Howard, that answer of hers, it‘s not going to work, is it? Not with the base?

HOWARD FINEMAN, “NEWSWEEK”: I don‘t think so. I just got off the phone with one of my best sources in New Hampshire, who is at Obama‘s side today. And the reason that this person is at Obama‘s side, in addition in addition to his charisma, is because of war. This person said to me, “Hillary‘s not going to be able to maintain it in New Hampshire if she expects to have a chance to win the New Hampshire primary.”

MATTHEWS: Is she talking like Muskie was back in 1968? A fine man, but he couldn‘t make up his mind about how much he didn‘t like the war in Vietnam.

CHUCK TODD, “THE HOTLINE”: FINEMAN: No, I don‘t think—No, I mean, I‘m not going to claim to be an expert on Ed Muskie, since I wasn‘t there. But, no, she is—she is definitive with—and has clarity based on how she read her speech on the Senate floor in October of 2002. We went back, we...

MATTHEWS: Hey, look, it doesn‘t matter what you say. It‘s how you vote. She voted to let the president go to war, so all of the words now have to either be, “I was right” or “I was wrong”. And she‘s a saying, “I voted correctly.”

TODD: ... but you read her speech carefully, and what‘s amazing is she pulls out phrases today that she uses then. It‘s as if at the time that they wrote the speech, they said, “Let‘s write the speech in a way that this may be the worst vote I ever cast in the United States Senate.”

And I think it‘s fascinating...

MATTHEWS: But is that—this is what Bill was always accused of—writing in the trapdoor, escape hatches?

TODD: It‘s either showing that she‘s sticking up—sticking to her convictions or she‘s being Clinton-esque...

MATTHEWS: Let me ask you. You had two votes. You had two options before we went to war: assume that this president wanted to go to war and voted for him, assume he wasn‘t going to go to war and voted for him are, or vote against him. The smart vote was to assume he wanted to go to war and vote against him if you were opposed to military action.

Hillary Clinton says she was opposed to military action, but she voted to give the president the opportunity to wage a war. Did she think he was bluffing? If so, that‘s not politically smart.

FINEMAN: Well, I was in the gallery watching here as she gave her speech. And it was a very careful, legal brief. And on a legal basis, she couldn‘t be sued for breach of contract because it was so carefully framed with all the trapdoors and escape hatches you were talking about.

But politics is not law. And the politics in New Hampshire right now

from the people I talked to today as well as in Iowa, as well as listening to Barack Obama out in Springfield—is a different matter. And she‘s not going to be able to recite her whole speech, Chris, in her own defense. People are going to take portions of it out. People are going to take out portions of what she said after the speech until now and look for inconsistencies.

MATTHEWS: But the Democratic Party is increasingly unanimous in opposition to the war. Is she with them or against them?

FINEMAN: Well, now you‘re asking me to read—asking me to read her mind. I think at heart she probably is with them. But she‘s afraid of being trapped with the label of flip-flopper, of playing it too cute by half. And the paradox of that is that‘s precisely how she‘s being labeled for her refusal to acknowledge the obvious point that everybody who‘s else who‘s in here acknowledged, that they made a mistake in voting the way they did.

MATTHEWS: Let‘s talk about this campaign as if it‘s begun because it has begun. I wondered when we went in to—that cold morning out there, Saturday morning, it was three degrees below 0 and wind chill, that—whether Obama would take her on. He‘s fifteen points back. She‘s around mid thirty, he‘s around twenty. He‘s two touchdowns back, to use football terminology. He‘s got to score against her. Is he? Is he taking the fight to her right now?

TODD: I don‘t think he needs to. And, no, he‘s not. I mean, I though it was interesting. That was a general election speech. You know, we did—did you know he never said the word “Democrat” or “Democratic Party” in his speech?

He mentioned Lincoln numerous times. I think he only quoted Republicans, Dick Lugar. So it was a general election announcement. This was a speech that they feel comfortable that him giving if he‘s the nominee in October of 2008.

MATTHEWS: But he‘s—he keeps—he‘s talked about being—the war in Iraq being ill-conceived. That‘s a direct dichotomy from Hillary, who said it wasn‘t waged right, there were insufficient allies, of this stuff, blah, blah, blah. And he said, “No, it was a bad idea. People should have seen it was a bad idea up front.”

TODD: Well, I think—that‘s just not distancing himself from Hillary Clinton, that‘s also contrasting him to John McCain, Rudy Giuliani and Mitt Romney, one of—a potential Republican opponent. I think don‘t think this is as much about taking shots at Hillary—And don‘t forget, he doesn‘t need—Hillary doesn‘t need to lose one vote for him to win in Iowa or New Hampshire. He needs get everybody else and if he gets them, she‘s still sitting.

MATTHEWS: So if she sits at 30, he can get mid 30s?

TODD: He can get mid 30s.

FINEMAN: However, I think two points. First of all, it‘s a long campaign.

FINEMAN: OK, so he can‘t attack her full-bore right now. What are we going to talk about for the next year? OK, he has to have a have a sense of drama about it. Number two, I think he started the other day in Iowa very subtly, doing just that. He said, “My position is very clear. I want all the troops out by March 31, 2008.”

Now, Hillary Clinton says that all the troops should be out by the time of the next presidency. He said, I‘m not quite clear what that means. I don‘t think she spelled out exactly—and it was all this, you know, I really want to know exactly what her position is. So—done in a gentlemanly way, but taking her on, I think.

MATTHEWS: If he keeps saying that, if he sticks to that line, we‘ve got to be out of there by next March, come next January and February, he can say, hey, look, if you listened to me, if you followed my timetable, we would be almost out of there by now?

FINEMAN: I must say, it was a very shrewd choice of date.

MATTHEWS: Right.

FINEMAN: Right at the end of primary season.

TODD: The other thing that will be interesting is you will see—you know you are going to see these flyers, they‘ll be very simple. Hillary Clinton‘s, excerpt from her speech October 2002 and excerpt from Barack Obama in 2002, what he said...

MATTHEWS: Who was speaking out at the time.

TODD: He said—speaking out on the Iraq war at the time. And you can just see that being sent to all these Iowa Democrats and say, whose judgment do you trust type of thing.

MATTHEWS: Could Hillary Clinton be in this case, correctly or not, smart or not, following her husband‘s lead? Back in ‘91 and ‘92, Bill Clinton did a sort of Betty and Veronica number on the war in Iraq, but he was able to say afterwards that he had endorsed the war, unlike all the other Democrats who voted against it. He was able to say, I was with this successful, popular war, the Persian Gulf War. So was Al Gore. He assembled a ticket of hawks.

Is Hillary following her husband‘s lead in thinking no matter what else happens, I‘m always better to be on the hawk side?

FINEMAN: Well, she is afflicted with the responsibility gene, as she told us. She is worried about actually being president, in her view. She‘s worried about the general election. She knows that the polls show that while people have grave doubts about this policy, think it was a mistake, think the war was a mistake, they are not ready to completely turn around and disengage from the Middle East altogether. And that‘s the vote that she is going for. That‘s the vote that she is going for.

MATTHEWS: So you agree with that? That she is thinking about being president or she‘s thinking about the general election and what the swift boat types can do to her by saying, flipping again, women‘s right to change her mind, the old sexist stuff? Use it against her particularly?

TODD: No—but—yes, I mean, she has the extra burden of being the first woman to be commander in chief argument, so she wants to look like she has a steel spine.

I think the other thing is—is that she is—part of her reasoning for doing this vote the first time was she believed the president should get this vote. And I remember her always saying, you know, I was there, I was on the other side watching President Clinton deal with this stuff. So I think she also views it as that, and she probably in her heart of hearts still supports her vote.

MATTHEWS: You know, Bill Clinton told me once over this year, he said, I would not have taken our country into Iraq, but I would have voted for the authorization. They are very surgical about this and very smart. It‘s hard to catch up with the Clintons.

Anyway, thank you, Chuck Todd. Thank you, Howard Fineman.

Up next, can Bill Richardson, the governor of New Mexico, beat out Hillary Clinton and Barack Obama and John Edwards and break into that top three of the Democratic fight? He‘s coming here next.

And tomorrow, MSNBC is all politics all day tomorrow, as the House debates the war in Iraq. The House‘s turn now, and the Senate is still trying to get it done there too.

MATTHEWS: Welcome back to HARDBALL. Governor Bill Richardson of New Mexico is a Democratic candidate for president. Governor Richardson, how do you break into top ranks of the guys and the woman, Hillary, fighting for the Democratic nomination?

GOV. BILL RICHARDSON (D), NEW MEXICO: Well, I have been very encouraged so far. I have been a candidate about three weeks. We have got thousands of volunteers, our fund-raising is going well. I visited nearly all of the early primary states. I‘m going to go to Iowa next month, New Hampshire this weekend. We had a very good session at the Democratic National Committee, the cattle call. I think most everyone agreed that I gave the best speech.

But I‘m going to outwork everybody. I‘m the candidate, I believe, with the best credentials.

MATTHEWS: Why are you better than Hillary?

RICHARDSON: I‘m a governor...

MATTHEWS: OK. Here is your chance, why are you better than Hillary?

RICHARDSON: Look, I‘m going to run a positive campaign, but if you look at foreign policy experience—I have been ambassador to the U.N., I‘ve been secretary of energy, I was on the House Intelligence Committee, I‘ve negotiated agreements with other countries, I have rescued hostages. I have been at the United Nations. I know Iraq. I have been there. I got two hostages out of Saddam Hussein. I have direct experience, so we can talk about becoming energy-independent or getting out of Iraq or raising America‘s standing in the world, creating jobs. I have done all this as a governor, as a congressman, as a U.N. ambassador and as the secretary of energy.

MATTHEWS: Hillary said a couple of days ago, a week or two ago, that she is equipped to deal with bad and evil men because of her dealings as first lady. What do you make of that assessment and that claim?

RICHARDSON: Well, I think she was referring to—during the debates on health care, when she was heading the health care debate, she had quite a bit of opposition. But you know, Chris...

MATTHEWS: You mean—you really think that she was talking about Republicans on the other side of the health care debate, not her husband?

MATTHEWS: I mean, that wasn‘t a joke, it wouldn‘t be a joke—there‘s nothing funny about saying you had to go up against Republicans. There‘s something funny about having to deal with a husband who has caused you pain. And I thought that‘s what she was joking about. Otherwise, it wouldn‘t have been funny among all those women, would it have been? Would that have been a joke to say I had to fight with Tom DeLay? That‘s not funny.

RICHARDSON: Well, she has to run her own campaign. She has to talk about her position on Iraq.

I‘m running a positive campaign. In fact, what I said, Chris, at the Democratic National Committee, we should all sign a pledge, all the Democratic candidates, that we are only going to run positive campaigns, we are not going to attack each other. I don‘t know if that is going to be realistic, but I want to talk about how I can bring this country together, how I believe we are too divided—Republicans, Democrats, red states and blue states—and I have the experience to do this. That‘s what I am trying to sell, that these are very difficult times nationally and internationally, and that I believe that I have the experience, the background, and I have actually done some of these things that everybody talks about and gives speeches on and has white papers.

I have brought countries together. I‘ve rescued hostages. I have created jobs in New Mexico. I have made schools better. I have made energy independence not just a cornerstone of my campaign...

MATTHEWS: OK. How do we—then I‘ll let you go positive, Governor -

how do we get out of Iraq?

RICHARDSON: We get out of Iraq by saying we will do this within this calendar year, and then we couple it with two important initiatives. One, a political solution. The three religious groups, bringing together, set up a Dayton type accord. Find ways to ensure that there‘s power sharing, a coalition government. And then secondly, a regional conference that deals with security, that deals with issues relating to reconstruction, and you bring in Iran and Syria and you look at an overall solution, not just in the Middle East, but in the Persian Gulf.

That‘s what I would do. You do that through diplomacy. I‘ve done this before. I‘ve been a U.N. ambassador. I know the region. I know the Israelis, the Palestinians. I would talk directly to the Syria and Iran in a very tough way.

But look what‘s happening now. There‘s division. The Congress is paralyzed. There‘s gridlock. The American people want candidates that are going to talk about how we can move this country forward instead of all of this division that is happening today in Washington and in the Congress and in the Bush administration.

MATTHEWS: I hope you get into this debate. I can‘t wait for it to start.

Governor Bill Richardson of New Mexico, thank you, sir, for joining us on HARDBALL.

Up next, HARDBALL‘s David Shuster will have the latest from the Scooter Libby trial. Big development there today about how we got into this war in Iraq. It was so interesting. It broke today.

And later, Republican Congressman Chris Shays and Democratic Congressman Elijah Cummings will be here to argue what Congress should be doing about Iraq. That‘s going to be interesting.

You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL.

The defense in the Scooter Libby perjury trial opened today. For the latest, let‘s go to the courthouse where HARDBALL‘s David Shuster is standing by—David.

DAVID SHUSTER< MSNBC CORRESPONDENT: Chris, some pretty stunning developments today as far as the administration‘s case for war and the extent to which CIA director George Tenet was shot down as far as his concerns about the president‘s pre-war State of Union speech. There was testimony today from Bob Woodward, the famous “Washington Post” reporter who was recalling a conversation that he had in June of 203 with Richard Armitage. Richard Armitage had some information about Ambassador Wilson‘s trip to Niger because Armitage‘s deputy Marc Grossman had been requested to get that information from the office of the vice president.

And in the course of conversation between Bob Woodward and Richard Armitage, Armitage is talking about the CIA‘s findings, and says that George Tenet, the CIA director, is clean as a whistle on this. And Armitage points out that the CIA director got the claim about Iraq‘s seeking uranium from Niger stricken from a speech that President Bush gave in Cincinnati in the fall of 2002.

And so then you hear Bob Woodward on this audiotape that was introduced into evidence today saying to Armitage, “How come it wasn‘t taken out of the State of the Union Address then?”

And Richard Armitage says, “Because I think it was overruled by the types down at the White House. Condi doesn‘t like being in the hot spot.”

The implication, Chris, is that Condoleezza Rice, the national security adviser, was confronted by George Tenet with a personal complaint that Tenet had about putting the Iraq seeking uranium in Niger in the State of the Union in 2003 on eve of war and that Condoleezza Rice didn‘t want to be in the hot spot, the implication being that she didn‘t want to have to battle Vice President Cheney or others for pushing that intelligence into the State of Union.

In any case, Chris, there were six high-profile reporters who testified today. And here they are. In addition to Bob Woodward, you had Walter Pincus of the “Washington Post”; David Sanger of the “New York Times”; Robert Novak, the columnist; Glenn Kessler and Evan Thomas, who are not pictured, of course, in this graphic.

The significant testimony, of course, at least the most interesting as far as the CIA leak is concerned, regards Robert Novak because he testified that his sources on the information about Valerie Wilson were Richard Armitage and also Karl Rove.

And what the defense is trying to do is they‘re trying to show that because all of these reporters may have had information about Valerie Wilson before she was outed, that it‘s possible that Scooter Libby learned this information from reporters like Tim Russert, not from government officials.

The problem for Scooter Libby is that Tim Russert is not part of any of this sort of chain of event. And that remains the crucial question: whether the jury‘s going to believe Tim Russert‘s denials or Scooter Libby‘s testimony that he learned about it from Tim Russert.

But again, Chris, on that issue of the president said in his State of the Union and the battles at the White house as far as what information would get in, we had known that the CIA had tried to keep it from the president‘s State of the Union. We found out today via Richard Armitage that the CIA director himself was personally trying to get it out of the State of the Union and was rebutted by officials at the White House—

Chris.

MATTHEWS: You know, that goes together with something that George Tenet said to me. I asked him how if the vice president‘s inquiry had led to that trip to Africa by Joe Wilson, why didn‘t he get a report back? And Tenet said to me, “Ask him, ask Cheney.”

And, of course, now we learn that it was George Tenet himself who tried to overrule Cheney and those people, those types at the White House, as they‘re called by Armitage, the hawks. But he failed to do so. So I wonder if the vice president knew about the trip to Africa, the results of the trip, as well as the fact that he asked the question that led to it.

And how else do we explain the fact that he was able to stand up to the vice president—or rather, stand up to George Tenet and say, “I know about that trip to Africa; it doesn‘t change my mind”?

Anyway, we‘re going to learn more about this hopefully in the weeks ahead. It‘s the one big mystery behind this whole thing. It‘s how we got involved in a war based on the threat of a nuclear bomb in the hands of Saddam Hussein that wasn‘t there.

Up next, how many White House members will oppose President Bush‘s troop increase—House members—in Iraq. Republican Congressman Chris Shays and Democratic Congressman Elijah Cummings will be here to being the big debate that starts tomorrow.

You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

NATALIE MAINES, THE DIXIE CHICKS: I think people are using their freedom of speech here tonight with all of these awards. So, we get the message. There is a lot of awesome music this year an some fantastic performances so it can get a little—I‘m very humbled and I think people were using their voice the same way. This loudmouth did.

(END VIDEO CLIP)

MATTHEWS: Well, welcome back to HARDBALL. The Dixie Chicks of course, were the big winners at the Grammys last night after being shut out for making anti -Bush comments during the run-up to the war in Iraq. Now the House of Representatives will take up the debate over the Iraq War with a resolution opposing the president‘s escalation plan. Democratic Congressman Elijah Cummings of Maryland is a member of the Armed Services Committee. And Republican Congressman Chris Shays of Connecticut has visited Iraq 14 times. He is a member of the Homeland Security and Government Reform committees.

Congressman Cummings, you first, what should we do with Iraq? What should be the ideal plan now?

REP. ELIJAH CUMMINGS (D-MD), ARMED SERVICES COMMITTEE: Well, the first thing that we have got to do is have this debate on this resolution. As you know, Chris, the president has not listened to the American people, has not listened to the Baker-Hamilton Commission, has not listened to anyone.

So the first thing we have got to do is send a message that we in the Congress of the United States are speaking for our constituents in saying that we fully support our troops but at the same time we are against this escalation.

MATTHEWS: Let me ask the same question to Congressman Shays. What should he we be doing in Iraq?

Well, we should be having a resolution that supports the study group recommendations. The transfer from Americans to Iraqis. The patrolling of the streets. The encouragement of Sunnis and Shias to sort out their differences and consequences if they don‘t. In other words, we leave. And a diplomatic surge.

That would be the kind of resolution that I think would send a great message throughout the world. And it could be bipartisan.

CUMMINGS: Chris, by the way, what I was saying a little bit earlier, keep in mind that Hamilton-Baker report has been out there for a while now. And I agree with Chris that we want the president—if he just took a look at that and went by that, we would be in pretty good shape, but he has refused to do that.

That is why I say, we have to start off with this debate and I think it will be a very important and significant one.

SHAYS: Well, I think he has done two of the three. I think he is transferring troops. He is putting tremendous pressure on the Shias and Sunnis to sort out their differences. He hasn‘t done the diplomatic surge. That‘s the one that he hasn‘t done, Elijah, and I agree that he should be doing that.

CUMMINGS: And the one thing he has done, is he has said that we are sending 21,500 more troops into Iraq, and of course the Hamilton Commission said that maybe we need to be pulling back gradually.

SHAYS: But they also said in their report that a surge may be necessary—a short-term surge.

CUMMINGS: But I can tell you, Chris, sitting on that Armed Services Committee and listening to the Joint Chiefs of Staff come before us, I have heard nothing yet that indicates that this is—there is any plan for success. I mean, as a matter of fact, the commandant of the Marines, Commandant Conway said to us that this—and I quote: This is no hail Mary.”

He basically said that this is going to be one in a series of so-called surges. So I don‘t want the American people to be confused by all of this. The fact is that it is no hail Mary and he said that we would probably be in Iraq for at least eight years to 12 years.

SHAYS: You know, Chris, if I could just point out, the critics said we want a new secretary, they have one. The critics said they wanted a new team in Iraq, and they got—they have Petraeus, who is by all accounts, Republican and Democrats, the best choice. And they have a new plan. And so, it‘s kind of to me like Congress is now micromanaging what a commander-in-chief has to decide.

CUMMINGS: Well.

MATTHEWS: Well, the dangerous question for most Americans is not that we will be—it is not just that we are not going to be able to get out of Iraq, we are stuck there for multiple years to come, it is that this war could enlarge. If you read The Washington Post today, gentlemen, as I know you did, on the front page, on The New York Times today, it looks to me like Iran is getting involved on the Shia side of this fight. Isn‘t there is a danger, Congressman Shays, in just staying there? The longer we stay in that part of world militarily, the more chance we are going to get involved militarily in a war with Iran?

SHAYS: Well, staying the course, I totally agree with you, would be a huge mistake. Carrying out this recommendation that Petraeus has asked for, and if it fails what is plan B? And plan B it seems to me is to sit in the perimeter. We should have a plan B. But I don‘t think we should just throw in the towel without making this effort.

CUMMINGS: Well, I don‘t see it as.

MATTHEWS: What can we get done—what can we—when are you—I have got to nail this down. When, Congressman Shays, do you think it is time to say we can stay or we can‘t or it is time to just get out of there, we are making things worse by being there? When will that come to your head?

SHAYS: Well, first off, I will tell you, to me it is a matter of months, not years. It is telling the Iraqis they have to move their troops there first. It is telling the Iraqis that Shias and Sunnis have to sort out their differences. So I don‘t want us to be in the center of a civil war, but if they to that then we should move forward. If they don‘t, then we should be leaving. I agree with that. And it shouldn‘t be years, it should be a period of time based on what they do.

CUMMINGS: I think that back in November, the American people spoke, and they spoke loud and clear. And they certainly spoke in Maryland and I know they spoke in Connecticut. And basically what they said is we want to get out of this. What did we have happen? Immediately of course Rumsfeld would resign and I think people applauded that. But that very—within a matter of hours, the president says instead of going along with what the American people want, he then goes far to the right and says that we are going to have this surge.

You know, we—I have said it to my colleagues many times, Chris, we do not have the right to remain silent. Our constituents have put us here.

SHAYS: Then have a motion to withdraw the troops. Just have a motion to withdraw them. Don‘t.

CUMMINGS: Again, Mr. Shays, who I—is a good friend of mine knows, that we all are trying to do the responsible thing.

SHAYS: I agree with that.

CUMMINGS: We just have a president that is not listening to us. And this is the first step in hopefully several steps to safely and securely bringing our troops out, at the same time make sure that the Iraqi people are OK, and make sure that that region is stabilized. And so.

MATTHEWS: OK. One last question of Mr. Shays. Congressman, are you changing your mind on Iraq gradually here? Are you getting less confident since, say, last fall when you fought mightily to hold your seat? Have you moved a little bit away from the war position of the president in that time?

SHAYS: Well, I mean, in August I said we needed to have timeline to withdraw our troops to get the Iraqis to take, you know, positive action. I still believe that. The Iraq Study Group said, get Shias and Sunnis to talk. And if they don‘t sort out their differences, there has to be consequence.

The consequences are then we do leave.

CUMMINGS: Well, when—Chris, when we presented those arguments before, the Joint Chiefs in Armed Services, and we asked, well, what happens if they don‘t? The Maliki government doesn‘t do what we have asked them to do? Basically they kind of threw up their hand and said, well, we will have to come up another plan.

MATTHEWS: Up next, a special look at the new film “Breach,” about how the FBI caught that notorious spy, Robert Hanssen.

And later, how much progress is the United States really making in training those Iraqis over there? That is the question we just had raised by the congressmen, especially Congressman Shays. This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: When the FBI—welcome back to HARDBALL. When the FBI caught notorious spy Robert Hanssen, they did it with the crucial help of one of the newest, youngest members of the FBI, Eric O‘Neill. His story is the subject of a new movie “Breach.”

LINNEY: Well, that was inevitable. For our purposes it was sort of necessary. He is a traitor, Eric. Started spying for the Russians, we think, in 1985. He has given them military secrets, intelligence secrets. He gave them our Continuity of Government program, which told them where the president would be taken during a nuclear or terrorist attack. The damage he has done to the U.S. government is in the billions.

But that is just money part. He has also given up lives.

(END VIDEO CLIP)

MATTHEWS: Well, we have got a real hero with us. Eric O‘Neill sits right with me. He is the guy being played there, along with Billy Ray, who wrote and directed the movie.

Congratulations.

BILLY RAY, WRITER/DIRECTOR, “BREACH”: Thank you.

ERIC O‘NEILL, CONSULTANT, “BREACH”: Thank you very much.

MATTHEWS: It‘s a great story about guts and doing your honor for the country, doing the right thing and catching this guy, this strange guy, Robert Hanssen, who was so smart and so oddly motivated.

Why would a guy who is—you know, I‘m Catholic, and one thing—you‘re Catholic, right? Are you Catholic?

MATTHEWS: Well, the idea of being Catholic is you really don‘t like communism. It is really antithetical.

(LAUGHTER)

MATTHEWS: Why would anybody who is an American and a patriot be a communist spy?

O‘NEILL: You know, he sold out at very early in his career, three years into the FBI. So he can‘t play “the FBI really wasn‘t listening to me” card, although I think it was a little bit.

MATTHEWS: Yes. He claimed—that‘s what comes across in the screenplay, that this guy was just so tired of being sort of the local bureaucrat, ignored by all the big shots that he had to find some way to be cool in the sick way of selling out his country.

RAY: Yes, except I think it goes deeper than that. I think that his father treated hill like a loser his entire life. And he walked around with that inside and I think he felt, here is a group of people, the Russians, who treat me like James Bond. And that was appealing to him, I think.

MATTHEWS: Well, they would, because he is a traitor. They‘re always nice to traitors. Where is Hanssen now? Is he going to see this movie?

O‘NEILL: He is in Florence, Colorado. He is in a supermax prison.

MATTHEWS: Will he get a DVD of this or no?

O‘NEILL: You know, I wouldn‘t put it past the FBI to let him see it, you know, sort of rub it in the face.

MATTHEWS: But according to the end of movie, you have this little superscript or whatever they call it—what do they call those things at the end of a movie when they take.

MATTHEWS: He looks like such a cowboy. Again, what do you think he is thinking how? He sold out his country. He gave away all kinds of people—sources, assets we had over there, guys who were on our side, were working for us in the Soviet Union were executed, horrible what he did.

O‘NEILL: Well, I‘m hoping he is feeling regret and feeling bad for what he put his family through. Hopefully he is thinking over what he did and.

MATTHEWS: But his wife—was his wife—she wasn‘t into any of this? She knew none of it?

O‘NEILL: Not that I‘m aware of. And nobody had anything to prove it.

MATTHEWS: Kathleen Quinlan is—I have always been a big fan of Kathleen Quinlan, she plays his wife.

RAY: She does. We know that in 1979 she knew of one drop that he made to the Russians. And she took him to confess it, to a priest named Father Buccarelli (ph).

MATTHEWS: And she thought that was a one-time only thing?

RAY: Well, Buccarelli, after giving it some thought, said, if you give the money over to charity, you don‘t have to turn yourself in. And Hanssen swore to the father and to his wife that he had done so. And to the best of our knowledge, that was the last it was ever brought up.

MATTHEWS: He was super patriot, a super FBI guy, and he was selling out his country the whole time.

O‘NEILL: He was betraying everything that seemed to matter.

MATTHEWS: Were you ever physically afraid of him? The guy in the movie, I would have—there are somewhat sort of weird monster movie aspects to this movie when I saw it last night that I wouldn‘t want to be in the next office right near this guy because he could have pulled a gun on you. He could have done anything.

O‘NEILL: Sure. It was like working with a dangerous animal, you have to have that healthy measure of respect and care because there was this fear that he would become aggressive and especially if he knew that I was the guy betraying him.

MATTHEWS: but you caught him? You nailed him?

O‘NEILL: I helped catch him.

MATTHEWS: You were the guy?

O‘NEILL: I was the guy in the room with him the whole time.

MATTHEWS: Thank you, for our country. I mean, it really is an honor to meet you. I mean, it is hard to imagine the guy selling out his country.

O‘NEILL: It was good to be there.

MATTHEWS: And it is hard to imagine the courage to catch this guy so close-up. Thank you very much.

MATTHEWS: Great writing. Eric O‘Neill, the man himself. The movie is called “Breach.”

Up next, a report on what is happening in the ground in Iraq, NBC‘s Jane Arraf talks to U.S. Lieutenant General Martin Dempsey. You are watching HARDBALL only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: This weekend General David Petraeus took control of the United States military in Iraq. Petraeus has urged that 20,000 additional U.S. troops that make up President Bush‘s surge be deployed as quickly as possible. NBC‘s Jane Arraf sat down with the commander responsible for overseeing the training of Iraqi forces, Lieutenant General Martin Dempsey.

(BEGIN VIDEOTAPE)

JANE ARRAF, NBC CORRESPONDENT: Chris, four years ago Brigadier General Martin Dempsey was in charge of the 1st Armored Decision in Baghdad. I covered him as he reopened bridges, and his troops fought the Mehdi Army in Najaf.

Now he has been back as Lieutenant General Dempsey, rebuilding the Iraqi security forces. And we talked about what Americans can expect.

Now the conventional wisdom is that we can‘t go home until the Iraqi forces are ready to take over. You have been quite candid about the fact that Iraqi forces are not progressing perhaps at the speed that Americans would want them to. At the end of this year, when there is a lot of talk that there will be the beginning of a drawdown, where would you expect those Iraqi forces to be? What will they be doing?

LT. GEN. MARTIN DEMPSEY, U.S. ARMY: Well, I think that what the American people expect and demand is that the Iraqi security forces will take charge of fighting the fight.

I don‘t think anyone—I hope that no one in our country believes that when we do begin to go home, whenever that is, that there won‘t be some residual effort left here to help in those other levels that I thought are—that I have suggested to you are far more challenging.

They are getting very close to being able to do the tactical level combat operations, the patrolling checkpoints, cordons and searches, attacks, defend. But it‘s going to take longer to do the institutional things I talked about.

And I think it‘s in our national interests to remain engaged at the institutional level. I mean, for example, you could make the case that until we see this government pass power once peacefully at the end of this four-year tenure, we certainly have an interest in how this turns out.

But at the tactical level, I do believe by the end of the year, the conditions should be set that they are increasingly taking responsibility for the combat operations.

ARRAF: Doesn‘t that mean, by your own admission, you have noted that there are problems with groups such as the national police, they are infiltrated by militias, some of them are aligned with death squads. What progress has been made on that?

DEMPSEY: Well, the national police was an interesting case, because, as you know, when we were here together in ‘03-‘04, there was nothing called the national police. And we did not train and equip the national police. They were handed to us, meaning to (INAUDIBLE), by one of those interim governments that thought at the time that as they prepared for one of these intervening elections that it would be a good idea to have additional security forces on the street.

And so they essentially trained and equipped them themselves. And they had very little training and very sporadic equipping. And they got what they asked for, they got a bunch of young men of—normally of one sects who were—had very limited skills, and did not understand what it meant to be a soldier, and let alone a policeman. And we called them national police. Actually, we didn‘t call them national police, as you remember, they were called commandos and public order brigades. And they turned out to be anything but.

So in the spring of ‘05, that—the next government, recognizing that they had a real problem on their hands, handed this thing over to us, and we began the effort to try to essentially retrain and reequip it. That took some time. Our assessment is they are good enough at paramilitary, and what they need is to learn how to be police. And then we gave them a new uniform, you‘ve seen it. And we bring them back into Baghdad and we more closely partnered with it than we have ever been before.

There are three brigades that have passed through that program and they are getting very good reviews. Now, there are going to be missteps. Baghdad is the most challenging environment on the face of the Earth, and maybe in the last 50 years.

ARRAF: Do you think Prime Minister Maliki is serious about cracking down on the militias?

DEMPSEY: I do. More—maybe I would put it somewhat differently, I think he is serious about making his security forces become the only legitimate—those that are allowed to use force. The only legitimate security force in Iraq. I can tell you he is absolutely serious about it.

Now is his entire government serious about it? I think there is some reason that we have to be concerned about that. But he personally, I have complete confidence that he is serious about it.

ARRAF: As Iraqi forces take over more territory, there is a feeling that American forces are going to be even more vulnerable because they are embedded there in small groups, in some cases they are going in in air support. We have seen four helicopters shot down. How worrying is that?

DEMPSEY: Well, I mean, as you know, we always—when we look at any mission, first and foremost, you know, we are—we have to accomplish the mission. And so the second step is we take a look at—we do a risk assessment and then we mitigate the risk away, to the extent we can. And we have a great deal of capability to mitigate risk through things such as air power, as you just mentioned. And mobility. We are extraordinarily mobile.

But let me mention one other thing. You know, we have been at this transition theme business now since March—roughly March of ‘05, but even before that, when I was the commander of the 1st Army Division in Baghdad, and we were growing the famous Iraq civil defense corps, essentially we were embedded or, you know, with them side by side.

I can tell you that since March of ‘05, there is not a single documented case of an Iraqi unit betraying its transition team. There is just no documented case that it has happened. Does that mean that it will never happen? Of course not.

But as we mitigate the risk, it is our approach at this point to suggest to our transition teams that their first instinct should be to trust their Iraqi counterparts, because it is that bond of trust at the end of the day, I think, that will make this force actually develop and be something like us.

They are never going to be us. By the way, they aspire to be, they just made recently a purchase of about $27 million of U.S. weapons, small arms, rifles and carbines, essentially, the M4 and the M16A4. And as I told you, they have invested almost $2 billion through me, or through the United States government into foreign military sales.

So they clearly want to end up with a force that is something like us, but we are not trying to build them to be us, not on my tour anyway.

ARRAF: General Dempsey is also in charge of setting up border

security forces, including at the Iranian border. He tells us the plan is

to close some of the border crossings and provide better equipment and

training to some of the rest, to cut down on corruption and arms smuggling

Chris.

(END VIDEOTAPE)

MATTHEWS: Well, there is a war without hype, and that was NBC‘s Jane Arraf with that great interview in Baghdad. Watch MSNBC all day Tuesday for full coverage of the U.S. House debate over Iraq.

Plus, Mitt Romney officially announces for president tomorrow in Michigan where his father was governor. Right now it‘s time for “TUCKER.”

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

END

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